Compilation of the Social Security Laws

LIMITATION ON CERTAIN PHYSICIAN REFERRALS

(1) In general.—Except as provided in subsection (b), if a physician (or an
immediate family member of such physician) has a financial relationship
with an entity specified in paragraph (2), then—

(A) the physician
may not make a referral to the entity for the furnishing of designated
health services for which payment otherwise may be made under this
title, and

(B) the entity
may not present or cause to be presented a claim under this title
or bill to any individual, third party payor, or other entity for
designated health services furnished pursuant to a referral prohibited
under subparagraph (A).

(2) Financial
relationship specified.—For purposes
of this section, a financial relationship of a physician (or an immediate
family member of such physician) with an entity specified in this
paragraph is—

(A) except as
provided in subsections (c) and (d), an ownership or investment interest
in the entity, or

(B) except as
provided in subsection (e), a compensation arrangement (as defined
in subsection (h)(1)) between the physician (or an immediate family
member of such physician) and the entity.

An ownership or investment interest described in subparagraph
(A) may be through equity, debt, or other means and includes an interest
in an entity that holds an ownership or investment interest in any
entity providing the designated health service.

(b) General
Exceptions to Both Ownership and Compensation Arrangement Prohibitions.—Subsection (a)(1) shall not apply in the following cases:

(1) Physicians’
services.—In the case of physicians’
services (as defined in section 1861(q)) provided personally by (or
under the personal supervision of) another physician in the same group
practice (as defined in subsection (h)(4)) as the referring physician.

(i) personally by
the referring physician, personally by a physician who is a member
of the same group practice as the referring physician, or personally
by individuals who are directly supervised by the physician or by
another physician in the group practice, and

(ii)(I) in a building
in which the referring physician (or another physician who is a member
of the same group practice) furnishes physicians’ services unrelated
to the furnishing of designated health services, or

(II) in the
case of a referring physician who is a member of a group practice,
in another building which is used by the group practice—

(aa) for the
provision of some or all of the group’s clinical laboratory
services, or

(bb) for the
centralized provision of the group’s designated health services
(other than clinical laboratory services),

unless the Secretary determines other terms and conditions under
which the provision of such services does not present a risk of program
or patient abuse, and

(B) that are
billed by the physician performing or supervising the services, by
a group practice of which such physician is a member under a billing
number assigned to the group practice, or by an entity that is wholly
owned by such physician or such group practice,

if the ownership or investment interest in such services meets
such other requirements as the Secretary may impose by regulation
as needed to protect against program or patient abuse. Such requirements
shall, with respect to magnetic resonance imaging, computed tomography,
positron emission tomography, and any other designated health services
specified under subsection (h)(6)(D) that the Secretary determines
appropriate, include a requirement that the referring physician inform
the individual in writing at the time of the referral that the individual
may obtain the services for which the individual is being referred
from a person other than a person described in subparagraph (A)(i)
and provide such individual with a written list of suppliers (as defined
in section 1861(d)) who furnish
such services in the area in which such individual resides.

(3) Prepaid
plans.—In the case of services furnished
by an organization—

(A) with a contract
under section 1876 to an individual enrolled with the organization,

(B) described
in section 1833(a)(1)(A) to an individual enrolled with the organization,

(C) receiving
payments on a prepaid basis, under a demonstration project under section
402(a) of the Social Security Amendments of 1967[332] or
under section 222(a) of the Social Security Amendments of 1972[333], to an individual enrolled with the organization,

(D) that is a
qualified health maintenance organization (within the meaning of section
1310(d) of the Public Health Service Act[334]) to an individiual
enrolled with the organization, or

(E) that is a
Medicare+Choice organization under part C that is offering a coordinated
care plan described in section 1851(a)(2)(A) to an individual enrolled
with the organization.

(4) Other
permissible exceptions.—In the case of
any other financial relationship which the Secretary determines, and
specifies in regulations, does not pose a risk of program or patient
abuse.

(5) Electronic
prescribing.—An exception established
by regulation under section 1860D-3(e)(6).

(c) General
Exception Related Only to Ownership or Investment Prohibition for
Ownership in Publicly Traded Securities and Mutual Funds.—Ownership of the following shall not be considered to be an
ownership or investment interest described in subsection (a)(2)(A):

(1) Ownership of investment
securities (including shares or bonds, debentures, notes, or other
debt instruments) which may be purchased on terms generally available
to the public and which are—

(A)(i) securities listed
on the New York Stock Exchange, the American Stock Exchange, or any
regional exchange in which quotations are published on a daily basis,
or foreign securities listed on a recognized foreign, national, or
regional exchange in which quotations are published on a daily basis,
or

(ii) traded under
an automated interdealer quotation system operated by the National
Association of Securities Dealers, and

(B) in a corporation
that had, at the end of the corporation’s most recent fiscal
year, or on average during the previous 3 fiscal years, stockholder
equity exceeding $75,000,000.

(2) Ownership of shares
in a regulated investment company as defined in section 851(a) of
the Internal Revenue Code of 1986[335], if such company had, at the end of the company’s
most recent fiscal year, or on average during the previous 3 fiscal
years, total assets exceeding $75,000,000.

(d) Additional
Exceptions Related Only to Ownership or Investment Prohibition.—The following, if not otherwise excepted under subsection (b),
shall not be considered to be an ownership or investment interest
described in subsection (a)(2)(A):

(1) Hospitals
in puerto rico.—In the case of designated
health services provided by a hospital located in Puerto Rico.

(2) Rural
providers.—In the case of designated
health services furnished in a rural area (as defined in section 1886(d)(2)(D))
by an entity, if—

(A) substantially
all of the designated health services furnished by the entity are
furnished to individuals residing in such a rural area;

(B) effective
for the 18-month period beginning on the date of the enactment of
the Medicare Prescription Drug, Improvement, and Modernization Act
of 2003, the entity is not a specialty hospital (as defined in subsection
(h)(7)); and

(C) in the case
where the entity is a hospital, the hospital meets the requirements
of paragraph (3)(D).

(3) Hospital
ownership.—In the case of designated
health services provided by a hospital (other than a hospital described
in paragraph (1)) if—

(A) the referring
physician is authorized to perform services at the hospital;

(B) effective
for the 18-month period beginning on the date of the enactment of
the Medicare Prescription Drug, Improvement, and Modernization Act
of 2003[336], the hospital is not a specialty hospital
(as defined in subsection (h)(7));

(C) the ownership
or investment interest is in the hospital itself (and not merely in
a subdivision of the hospital); and

(D) the hospital
meets the requirements described in subsection (i)(1) not later than 18 months after the date
of the enactment of this subparagraph.

(e) Exceptions
Relating to Other Compensation Arrangements.—The following shall not be considered to be a compensation arrangement
described in subsection (a)(2)(B):

(A) Office space.—Payments made by a lessee
to a lessor for the use of premises if—

(i) the lease is
set out in writing, signed by the parties, and specifies the premises
covered by the lease,

(ii) the space rented
or leased does not exceed that which is reasonable and necessary for
the legitimate business purposes of the lease or rental and is used
exclusively by the lessee when being used by the lessee, except that
the lessee may make payments for the use of space consisting of common
areas if such payments do not exceed the lessee’s pro rata share
of expenses for such space based upon the ratio of the space used
exclusively by the lessee to the total amount of space (other than
common areas) occupied by all persons using such common areas,

(iii) the lease
provides for a term of rental or lease for at least 1 year,

(iv) the rental
charges over the term of the lease are set in advance, are consistent
with fair market value, and are not determined in a manner that takes
into account the volume or value of any referrals or other business
generated between the parties,

(v) the lease would
be commercially reasonable even if no referrals were made between
the parties, and

(vi) the lease meets
such other requirements as the Secretary may impose by regulation
as needed to protect against program or patient abuse.

(B) Equipment.—Payments made by a lessee
of equipment to the lessor of the equipment for the use of the equipment
if—

(i) the lease is
set out in writing, signed by the parties, and specifies the equipment
covered by the lease,

(ii) the equipment
rented or leased does not exceed that which is reasonable and necessary
for the legitimate business purposes of the lease or rental and is
used exclusively by the lessee when being used by the lessee,

(iii) the lease
provides for a term of rental or lease of at least 1 year,

(iv) the rental
charges over the term of the lease are set in advance, are consistent
with fair market value, and are not determined in a manner that takes
into account the volume or value of any referrals or other business
generated between the parties,

(v) the lease would
be commercially reasonable even if no referrals were made between
the parties, and

(vi) the lease meets
such other requirements as the Secretary may impose by regulation
as needed to protect against program or patient abuse.

(2) Bona
fide employment relationships.—Any amount
paid by an employer to a physician (or an immediate family member
of such physician) who has a bona fide employment relationship with
the employer for the provision of services if—

(ii) is not determined
in a manner that takes into account (directly or indirectly) the volume
or value of any referrals by the referring physician,

(C) the remuneration
is provided pursuant to an agreement which would be commercially reasonable
even if no referrals were made to the employer, and

(D) the employment
meets such other requirements as the Secretary may impose by regulation
as needed to protect against program or patient abuse.

Subparagraph (B)(ii) shall not prohibit the payment of remuneration
in the form of a productivity bonus based on services performed personally
by the physician (or an immediate family member of such physician).

(v) the compensation
to be paid over the term of the arrangement is set in advance, does
not exceed fair market value, and except in the case of a physician
incentive plan described in subparagraph (B), is not determined in
a manner that takes into account the volume or value of any referrals
or other business generated between the parties,

(vi) the services
to be performed under the arrangement do not involve the counseling
or promotion or a business arrangement or other activity that violates
any State or Federal law, and

(vii) the arrangement
meets such other requirements as the Secretary may impose by regulation
as needed to protect against program or patient abuse.

(i) In
general.—In the case of a physician incentive
plan (as defined in clause (ii)) between a physician and an entity,
the compensation may be determined in a manner (through a withhold,
capitation, bonus, or otherwise) that takes into account directly
or indirectly the volume or value of any referrals or other business
generated between the parties, if the plan meets the following requirements:

(I) No specific
payment is made directly or indirectly under the plan to a physician
or a physician group as an inducement to reduce or limit medically
necessary services provided with respect to a specific individual
enrolled with the entity.

(II) In the
case of a plan that places a physician or a physician group at substantial
financial risk as determined by the Secretary pursuant to section 1876(i)(8)(A)(ii), the plan complies with any requirements the Secretary may impose
pursuant to such section.

(III) Upon
request by the Secretary, the entity provides the Secretary with access
to descriptive information regarding the plan, in order to permit
the Secretary to determine whether the plan is in compliance with
the requirements of this clause.

(ii) Physician
incentive plan defined.—For purposes
of this subparagraph, the term “physician incentive plan” means any compensation arrangement between an entity and a physician
or physician group that may directly or indirectly have the effect
of reducing or limiting services provided with respect to individuals
enrolled with the entity.

(4) Remuneration
unrelated to the provision of designated health services.—In the case of remuneration which is provided by a hospital
to a physician if such remuneration does not relate to the provision
of designated health services.

(5) Physician
recruitment.—In the case of remuneration
which is provided by a hospital to a physician to induce the physician
to relocate to the geographic area served by the hospital in order
to be a member of the medical staff of the hospital, if—

(B) the amount
of the remuneration under the arrangement is not determined in a manner
that takes into account (directly or indirectly) the volume or value
of any referrals by the referring physician, and

(C) the arrangement
meets such other requirements as the Secretary may impose by regulation
as needed to protect against program or patient abuse.

(6) Isolated
transactions.—In the case of an isolated
financial transaction, such as a one-time sale of property or practice,
if—

(A) the requirements
described in subparagraphs (B) and (C) of paragraph (2) are met with
respect to the entity in the same manner as they apply to an employer,
and

(B) the transaction
meets such other requirements as the Secretary may impose by regulation
as needed to protect against program or patient abuse.

(A) In general.—An arrangement between
a hospital and a group under which designated health services are
provided by the group but are billed by the hospital if—

(i) with respect
to services provided to an inpatient of the hospital, the arrangement
is pursuant to the provision of inpatient hospital services under
section 1861(b)(3),

(ii) the arrangement
began before December 19, 1989, and has continued in effect without
interruption since such date,

(iii) with respect
to the designated health services covered under the arrangement, substantially
all of such services furnished to patients of the hospital are furnished
by the group under the arrangement,

(iv) the arrangement
is pursuant to an agreement that is set out in writing and that specifies
the services to be provided by the parties and the compensation for
services provided under the agreement,

(v) the compensation
paid over the term of the agreement is consistent with fair market
value and the compensation per unit of services is fixed in advance
and is not determined in a manner that takes into account the volume
or value of any referrals or other business generated between the
parties,

(vi) the compensation
is provided pursuant to an agreement which would be commercially reasonable
even if no referrals were made to the entity, and

(vii) the arrangement
between the parties meets such other requirements as the Secretary
may impose by regulation as needed to protect against program or patient
abuse.

(8) Payments
by a physician for items and services.—Payments made by a physician—

(A) to a laboratory
in exchange for the provision of clinical laboratory services, or

(B) to an entity
as compensation for other items or services if the items or services
are furnished at a price that is consistent with fair market value.

(f) Reporting
Requirements.—Each entity providing covered
items or services for which payment may be made under this title shall
provide the Secretary with the information concerning the entity’s
ownership, investment, and compensation arrangements, including—

(2) the names and
unique physician identification numbers of all physicians with an
ownership or investment interest (as described in subsection (a)(2)(A)),
or with a compensation arrangement (as described in subsection (a)(2)(B)),
in the entity, or whose immediate relatives have such an ownership
or investment interest or who have such a compensation relationship
with the entity.

Such information shall be provided in such form, manner, and
at such times as the Secretary shall specify. The requirement of this
subsection shall not apply to designated health services provided
outside the United States or to entities which the Secretary determines
provides services for which payment may be made under this title very
infrequently.

(1) Denial
of payment.—No payment may be made under
this title for a designated health service which is provided in violation
of subsection (a)(1).

(2) Requiring
refunds for certain claims.—If a person
collects any amounts that were billed in violation of subsection (a)(1),
the person shall be liable to the individual for, and shall refund
on a timely basis to the individual, any amounts so collected.

(3) Civil
money penalty and exclusion for improper claims.—Any person that presents or causes to be presented a bill or
a claim for a service that such person knows or should know is for
a service for which payment may not be made under paragraph (1) or
for which a refund has not been made under paragraph (2) shall be
subject to a civil money penalty of not more than $15,000 for each
such service. The provisions of section 1128A (other than the first sentence
of subsection (a) and other than subsection (b)) shall apply to a
civil money penalty under the previous sentence in the same manner
as such provisions apply to a penalty or proceeding under section 1128A(a).

(4) Civil
money penalty and exclusion for circumvention schemes.—Any physician or other entity that enters into an arrangement
or scheme (such as a cross-referral arrangement) which the physician
or entity knows or should know has a principal purpose of assuring
referrals by the physician to a particular entity which, if the physician
directly made referrals to such entity, would be in violation of this
section, shall be subject to a civil money penalty of not more than
$100,000 for each such arrangement or scheme. The provisions of section 1128A (other than
the first sentence of subsection (a) and other than subsection (b))
shall apply to a civil money penalty under the previous sentence in
the same manner as such provisions apply to a penalty or proceeding
under section 1128A(a).

(5) Failure
to report information.—Any person who
is required, but fails, to meet a reporting requirement of subsection
(f) is subject to a civil money penalty of not more than $10,000 for
each day for which reporting is required to have been made. The provisions
of section 1128A (other than the first sentence of subsection (a) and other than
subsection (b)) shall apply to a civil money penalty under the previous
sentence in the same manner as such provisions apply to a penalty
or proceeding under section 1128A(a).

(A) In general.—The Secretary shall issue
written advisory opinions concerning whether a referral relating to
designated health services (other than clinical laboratory services)
is prohibited under this section. Each advisory opinion issued by
the Secretary shall be binding as to the Secretary and the party or
parties requesting the opinion.

(B) Application of certain rules.—The Secretary
shall, to the extent practicable, apply the rules under subsections
(b)(3) and (b)(4) and take into account the regulations promulgated
under subsection (b)(5) of section 1128D in the issuance of advisory opinions
under this paragraph.

(C) Regulations.—In order to implement
this paragraph in a timely manner, the Secretary may promulgate regulations
that take effect on an interim basis, after notice and pending opportunity
for public comment.

(D) Applicability.—This paragraph shall
apply to requests for advisory opinions made after the date which
is 90 days after the date of the enactment of this paragraph and before
the close of the period described in section 1128D(b)(6).

(A) The term “compensation arrangement” means any arrangement involving
any remuneration between a physician (or an immediate family member
of such physician) and an entity other than an arrangement involving
only remuneration described in subparagraph (C).

(B) The term “remuneration” includes any remuneration, directly or indirectly,
overtly or covertly, in cash or in kind.

(C) Remuneration
described in this subparagraph is any remuneration consisting of any
of the following:

(i) The forgiveness
of amounts owed for inaccurate tests or procedures, mistakenly performed
tests or procedures, or the correction of minor billing errors.

(ii) The provision
of items, devices, or supplies that are used solely to—

(I) collect,
transport, process, or store specimens for the entity providing the
item, device, or supply, or

(II) order
or communicate the results of tests or procedures for such entity.

(iii) A payment
made by an insurer or a self-insured plan to a physician to satisfy
a claim, submitted on a fee for service basis, for the furnishing
of health services by that physician to an individual who is covered
by a policy with the insurer or by the self-insured plan, if—

(I) the health
services are not furnished, and the payment is not made, pursuant
to a contract or other arrangement between the insurer or the plan
and the physician,

(II) the
payment is made to the physician on behalf of the covered individual
and would otherwise be made directly to such individual,

(III) the
amount of the payment is set in advance, does not exceed fair market
value, and is not determined in a manner that takes into account directly
or indirectly the volume or value of any referrals, and

(IV) the
payment meets such other requirements as the Secretary may impose
by regulation as needed to protect against program or patient abuse.

(2) Employee.—An individual is considered to be “employed by” or an “employee” of an entity if the individual would
be considered to be an employee of the entity under the usual common
law rules applicable in determining the employer-employee relationship
(as applied for purposes of section 3121(d)(2) of the Internal Revenue
Code of 1986)[337].

(3) Fair
market value.—The term “fair market
value” means the value in arms length transactions, consistent
with the general market value, and, with respect to rentals or leases,
the value of rental property for general commercial purposes (not
taking into account its intended use) and, in the case of a lease
of space, not adjusted to reflect the additional value the prospective
lessee or lessor would attribute to the proximity or convenience to
the lessor where the lessor is a potential source of patient referrals
to the lessee.

(A) Definition of group practice.—The term “group practice” means a group of 2 or more physicians legally
organized as a partnership, professional corporation, foundation,
not-for-profit corporation, faculty practice plan, or similar association—

(i) in which each
physician who is a member of the group provides substantially the
full range of services which the physician routinely provides, including
medical care, consultation, diagnosis, or treatment, through the joint
use of shared office space, facilities, equipment and personnel,

(ii) for which substantially
all of the services of the physicians who are members of the group
are provided through the group and are billed under a billing number
assigned to the group and amounts so received are treated as receipts
of the group,

(iii) in which
the overhead expenses of and the income from the practice are distributed
in accordance with methods previously determined,

(iv) except as provided
in subparagraph (B)(i), in which no physician who is a member of the
group directly or indirectly receives compensation based on the volume
or value of referrals by the physician,

(v) in which members
of the group personally conduct no less than 75 percent of the physician-patient
encounters of the group practice, and

(vi) which meets
such other standards as the Secretary may impose by regulation.

(i) Profits
and productivity bonuses.—A physician
in a group practice may be paid a share of overall profits of the
group, or a productivity bonus based on services personally performed
or services incident to such personally performed services, so long
as the share or bonus is not determined in any manner which is directly
related to the volume or value of referrals by such physician.

(ii) Faculty
practice plans.—In the case of a faculty
practice plan associated with a hospital, institution of higher education,
or medical school with an approved medical residency training program
in which physician members may provide a variety of different specialty
services and provide professional services both within and outside
the group, as well as perform other tasks such as research, subparagraph
(A) shall be applied only with respect to the services provided within
the faculty practice plan.

(A) Physicians’ services.—Except
as provided in subparagraph (C), in the case of an item or service
for which payment may be made under part B, the request by a physician
for the item or service, including the request by a physician for
a consultation with another physician (and any test or procedure ordered
by, or to be performed by (or under the supervision of) that other
physician), constitutes a “referral” by a “referring
physician”.

(B) Other items.—Except as provided in
subparagraph (C), the request or establishment of a plan of care by
a physician which includes the provision of the designated health
service constitutes a “referral” by a “referring
physician”.

(C) Clarification respecting certain services integral to a consultation
by certain specialists.—A request by
a pathologist for clinical diagnostic laboratory tests and pathological
examination services, a request by a radiologist for diagnostic radiology
services, and a request by a radiation oncologist for radiation therapy,
if such services are furnished by (or under the supervision of) such
pathologist, radiologist, or radiation oncologist pursuant to a consultation
requested by another physician does not constitute a “referral” by a “referring physician”.

(6) Designated
health services.—The term “designated
health services” means any of the following items or services:

(A) In general.—For purposes of this section,
except as provided in subparagraph (B), the term “specialty
hospital” means a subsection (d) hospital (as defined in section 1886(d)(1)(B))
that is primarily or exclusively engaged in the care and treatment
of one of the following categories:

(iv) Any other specialized
category of services that the Secretary designates as inconsistent
with the purpose of permitting physician ownership and investment
interests in a hospital under this section.

(B) Exception.—For purposes of this section,
the term “specialty hospital” does not include any hospital—

(ii) for which the
number of physician investors at any time on or after such date is
no greater than the number of such investors as of such date;

(iii) for which
the type of categories described in subparagraph (A) at any time on
or after such date is no different than the type of such categories
as of such date;

(iv) for which any
increase in the number of beds occurs only in the facilities on the
main campus of the hospital and does not exceed 50 percent of the
number of beds in the hospital as of November 18, 2003, or 5 beds,
whichever is greater; and

(B) Limitation on expansion of facility capacity.—Except as provided in paragraph (3), the number of operating
rooms, procedure rooms, and beds for which the hospital is licensed
at any time on or after the date of the enactment of this subsection
is no greater than the number of operating rooms, procedure rooms,
and beds for which the hospital is licensed as of such date.

(i) The hospital
submits to the Secretary an annual report containing a detailed description
of—

(I) the identity
of each physician owner or investor and any other owners or investors
of the hospital; and

(II) the nature
and extent of all ownership and investment interests in the hospital.

(ii) The hospital
has procedures in place to require that any referring physician owner
or investor discloses to the patient being referred, by a time that
permits the patient to make a meaningful decision regarding the receipt
of care, as determined by the Secretary—

(I) the ownership
or investment interest, as applicable, of such referring physician
in the hospital; and

(II) if applicable,
any such ownership or investment interest of the treating physician.

(iii) The hospital
does not condition any physician ownership or investment interests
either directly or indirectly on the physician owner or investor making
or influencing referrals to the hospital or otherwise generating business
for the hospital.

(iv) The hospital
discloses the fact that the hospital is partially owned or invested
in by physicians—

(i) The percentage
of the total value of the ownership or investment interests held in
the hospital, or in an entity whose assets include the hospital, by
physician owners or investors in the aggregate does not exceed such
percentage as of the date of enactment of this subsection.

(ii) Any ownership
or investment interests that the hospital offers to a physician owner
or investor are not offered on more favorable terms than the terms
offered to a person who is not a physician owner or investor.

(iii) The hospital
(or any owner or investor in the hospital) does not directly or indirectly
provide loans or financing for any investment in the hospital by a
physician owner or investor.

(iv) The hospital
(or any owner or investor in the hospital) does not directly or indirectly
guarantee a loan, make a payment toward a loan, or otherwise subsidize
a loan, for any individual physician owner or investor or group of
physician owners or investors that is related to acquiring any ownership
or investment interest in the hospital.

(v) Ownership or
investment returns are distributed to each owner or investor in the
hospital in an amount that is directly proportional to the ownership
or investment interest of such owner or investor in the hospital.

(vi) Physician owners
and investors do not receive, directly or indirectly, any guaranteed
receipt of or right to purchase other business interests related to
the hospital, including the purchase or lease of any property under
the control of other owners or investors in the hospital or located
near the premises of the hospital.

(vii) The hospital
does not offer a physician owner or investor the opportunity to purchase
or lease any property under the control of the hospital or any other
owner or investor in the hospital on more favorable terms than the
terms offered to an individual who is not a physician owner or investor.

(i) Insofar as the
hospital admits a patient and does not have any physician available
on the premises to provide services during all hours in which the
hospital is providing services to such patient, before admitting the
patient—

(II) refer
and transfer patients to hospitals with the capability to treat the
needs of the patient involved.

(F) Limitation on application to certain converted facilities.—The hospital was not converted from an ambulatory surgical center
to a hospital on or after the date of enactment of this subsection.

(2) Publication
of information reported.—The Secretary
shall publish, and update on an annual basis, the information submitted
by hospitals under paragraph (1)(C)(i) on the public Internet website
of the Centers for Medicare & Medicaid Services.

(i) Establishment.—The Secretary shall establish and implement a process under
which a hospital that is an applicable hospital (as defined in subparagraph
(E)) or is a high Medicaid facility described in subparagraph (F)may
apply for an exception from the requirement under paragraph (1)(A).

(ii) Opportunity
for community input.—The process under
clause (i) shall provide individuals and entities in the community
in which the applicable hospital applying for an exception is located
with the opportunity to provide input with respect to the application.

(iii) Timing for implementation.—The Secretary
shall implement the process under clause (i) on February 1, 2012.

(iv) Regulations.—Not later than January 1, 2012, the Secretary shall promulgate
regulations to carry out the process under clause (i).

(B) Frequency.—The process described in
subparagraph (A) shall permit an applicable hospital to apply for
an exception up to once every 2 years.

(i) In
general.—Subject to clause (ii) and subparagraph
(D), an applicable hospital granted an exception under the process
described in subparagraph (A) may increase the number of operating
rooms, procedure rooms, and beds for which the applicable hospital
is licensed above the baseline number of operating rooms, procedure
rooms, and beds of the applicable hospital (or, if the applicable
hospital has been granted a previous exception under this paragraph,
above the number of operating rooms, procedure rooms, and beds for
which the hospital is licensed after the application of the most recent
increase under such an exception).

(ii) 100
percent increase limitation.—The Secretary
shall not permit an increase in the number of operating rooms, procedure
rooms, and beds for which an applicable hospital is licensed under
clause (i) to the extent such increase would result in the number
of operating rooms, procedure rooms, and beds for which the applicable
hospital is licensed exceeding 200 percent of the baseline number
of operating rooms, procedure rooms, and beds of the applicable hospital.

(iii) Baseline number of operating rooms, procedure rooms, and beds.—In this paragraph, the term “baseline number of operating
rooms, procedure rooms, and beds” means the number of operating
rooms, procedure rooms, and beds for which the applicable hospital
is licensed as of the date of enactment of this subsection (or, in
the case of a hospital that did not have a provider agreement in effect
as of such date but does have such an agreement in effect on December
31, 2010, the effective date of such provider agreement).

(D) Increase limited to facilities on the main campus of the hospital.—Any increase in the number of operating rooms, procedure rooms,
and beds for which an applicable hospital is licensed pursuant to
this paragraph may only occur in facilities on the main campus of
the applicable hospital.

(E) Applicable hospital.—In this paragraph,
the term “applicable hospital” means a hospital—

(i) that is located
in a county in which the percentage increase in the population during
the most recent 5-year period (as of the date of the application under
subparagraph (A)) is at least 150 percent of the percentage increase
in the population growth of the State in which the hospital is located
during that period, as estimated by Bureau of the Census;

(ii) whose annual
percent of total inpatient admissions that represent inpatient admissions
under the program under title XIX is equal to or greater than the
average percent with respect to such admissions for all hospitals
located in the county in which the hospital is located;

(iii) that does
not discriminate against beneficiaries of Federal health care programs
and does not permit physicians practicing at the hospital to discriminate
against such beneficiaries;

(iv) that is located
in a State in which the average bed capacity in the State is less
than the national average bed capacity; and

(v) that has an average
bed occupancy rate that is greater than the average bed occupancy
rate in the State in which the hospital is located.

(F) High medicaid facility described.—A
high Medicaid facility described in this subparagraph is a hospital
that—

(ii) with respect
to each of the 3 most recent years for which data are available, has
an annual percent of total inpatient admissions that represent inpatient
admissions under title XIX that is estimated to be greater than such
percent with respect to such admissions for any other hospital located
in the county in which the hospital is located; and

(G) Procedure rooms.—In this subsection,
the term “procedure rooms” includes rooms in which catheterizations,
angiographies, angiograms, and endoscopies are performed, except such
term shall not include emergency rooms or departments (exclusive of
rooms in which catheterizations, angiographies, angiograms, and endoscopies
are performed).

(H) Publication of final decisions.—Not
later than 60 days after receiving a complete application under this
paragraph, the Secretary shall publish in the Federal Register the
final decision with respect to such application.

(I) Limitation on review.—There shall be
no administrative or judicial review under section 1869, section 1878, or otherwise of the process under this paragraph (including
the establishment of such process).

(4) Collection
of ownership and investment information.—For purposes of subparagraphs (A)(i) and (D)(i) of paragraph (1),
the Secretary shall collect physician ownership and investment information
for each hospital.

(5) Physician
owner or investor defined.—For purposes
of this subsection, the term “physician owner or investor” means a physician (or an immediate family member of such physician)
with a direct or an indirect ownership or investment interest in the
hospital.

(6) Clarification.—Nothing in this subsection shall be construed as preventing
the Secretary from revoking a hospital’s provider agreement
if not in compliance with regulations implementing section 1866.

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